Business plan - Financial Management in business and the use of ICT.

Unit 2 Business plan - Assignment 3 Financial Management in business

The importance of a financial plan is making sure that as a business you are prepared for any possible outcomes. By making a plan then the business would get a brief idea of whether they are likely to make a profit or not. Also it would allow them to make any adjustments to ensure they make the most amount of money possible and avoid any unexpected problems. It gives an idea of the amount of money the business is likely to have at the end of the year.

Start up costs

The relevance of start up costs are that they need to be kept to a minimum so that you still have enough money to run your business, however you also need to buy good quality products to invest in your business so it works out better in the long run, both in the quality in the service and that you wont have to replace things as often. As a business you must also need to price items well so that the customer is willing to pay the price as well as also being able to break even, If the business puts their prices too low then they will not be able to pay back the money that had to use to start up their business and this will result in a loss, On the other hand if the business puts the prices too high then the customer numbers will decrease to due less people wanting to pay that amount, which will also result in less money and the business will lose out.

Running costs

Running costs are the things that the business needs to keep buying and replacing such as stock.. Running costs also include phone bills and items that you need to pay constantly for example monthly. They will have to be paid constantly throughout the year and it is very important to buy the right amount of stuff, because if you buy too much one month then in cases such as perishables, e.g. the food for the cafe, if the food is not sold then it is wasted and the company loses money and would not be able to have enough money for the next month to buy supplies, where as if you buy too little then the business does not have enough stock to sell and make enough money to pay for the supplies for the next month. Making a financial plan meant that a business know how much they need to buy and sell in order to make enough money to break even so that they can carry on and hopefully make a profit.

Cash Flow & breakeven

Strengths:-

Trends in the income costs. Is stable and there aren’t any months where the money being made is much lower than the majority of the other months
Expenditure is under control and everything is listed and there is a sum for everything that needs to be paid for.
As the cafe business buying in bulk would mean that i would be able to get many of the items such as food for cheaper form a warehouse or cash and carry
The cash flow helps me by showing whether or not ...

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Cash Flow & breakeven

Strengths:-

Trends in the income costs. Is stable and there aren’t any months where the money being made is much lower than the majority of the other months
Expenditure is under control and everything is listed and there is a sum for everything that needs to be paid for.
As the cafe business buying in bulk would mean that i would be able to get many of the items such as food for cheaper form a warehouse or cash and carry
The cash flow helps me by showing whether or not i am gaining or losing money, also it shows where I need to start making more money and where I should be emphasising more to gain a profit.
Hopefully I will get more money in the future from sales and customers and the advertising and marketing should be cheaper as I will hopefully become better known and the advertising won’t be as necessary.

Weaknesses:-

Money is very tight and I have to be very careful not to spend too much money on expenditures which I am not making back from sales and customers.
If necessary the business could make prices for the car wash higher or the cafe could be more expensive, but hopefully if we get more customers then this shouldn’t be a problem
To lower costs I have already decided to do most of the work myself as not to pay staff, and any staff I do hire would be friends or family who would be willing to work for a slightly lower price.
If we do not get the customers we have predicted this could cause problems in the future because we would not have the finance to pay for the stock for the next month.

Action to take to avoid problems:-

In order to make sure that the business has enough money to last throughout the year, I will make sure to buy the right amount of supplies to fit the amount of customers predicted for that month, this would mean that there is enough to last, without wasting any money.
At the end of the month if there is any spare stock which cant be used in the next month the business could sell it cheaper to make a bit of money on the side.

Unit 2 - Assignment 4

The use of ICT and software is essential in the running of a business. The business relies on good, well run software to ensure that the business is run and managed to the best it can. Examples of this are when processing information and certain types of documents, making calculations, keeping records of money and financial information.

Spread sheets are used in businesses to record things such as cash flow and profit forecasting, budgeting and break even analysis.

Word processing and data base software can be used to lead to improvements in business and can also make it simpler and a more effective to manage certain aspects of the business. It also means a business can record information in many different areas.

Businesses also use specialist software for example accounting packages; use the internet as a source of research and communication applications such as email as a way of communicating and advertising, and E-commerce as a method of training employees.

In the running of a business you have to make sure that as a business, you appreciate any legal or corporate issues which are associated with using ICT, such as the influence of data protection acts which mean that you cannot share private information such as customer information. Abiding by health and safety issues where staff must work safely when using software in order to not harm to themselves and protect the computer software from viruses etc.

Business software is important in the running and success of a business and there for the company has to make sure they have the best possible software to suit what they need it for. Businesses need lots of different software such as a word package, Excel, email, an accounts package, pay roll package, and advertising plus anti-virus protection such as firewalls.

Spreadsheets help a business by setting out information in a way that is a lot easier to understand. By setting out the information in spreadsheet it that shows clearly where the business is gaining or losing money which helps the company to see where they are doing well and where they are doing as failing financially. It also shows in an obvious way the comparison between things they have changed so they can be notified quickly to see whether or not a change they have made has helped the business in anyway.

Businesses are generally imposed to a range of different risks. These could be to do with a machinery breakdown, or collapses in vital systems needed to run the company, or problems to do with the public liability itself. Commercial packages can help to protect the business in a numerous ways specifically designed to match a business’s specifications and the budget they need to work within.

Word processing such as Microsoft word helps the business due to you being able write out things such as business plans & proposals. You can put all information and spreadsheets in the same place plus a company can also put together all the information they have on money, ideas and other subjects which they need to help monitor the business and a word document could help put this all together.

When using computers and ICT software there are legal guidelines and corporate issues that the company or business needs to comply with. This is very important due to however well a company is being run, by forgetting or discarding any legal issues can lead to a downfall or closing down of your business and you could lose a lot of money. Some of these issues include the data protection act which is a law designed to protect data in which has been stored on a computer. The computer misuse act, which meant as a company or a business you have to know about all the laws regarding computer misuse; for example software can not be copied without direct permission from the people who initially made the software. Also a company in particular has to take great care in making sure they don’t break any laws to do with copyright law. As a business this is a hard one to cope with because of using other businesses as help and inspiration for new ideas they need to make sure that they do not break laws and get prosecuted.

For my business/company

As catering is my business it will need a lot of different software to help run the business more efficiently and effectively. This would include an email account and website to promote my business on the internet; this would also help to contact customers and other people within the business. The business will also need excel or spreadsheets to set out all financial information and can clearly see any changes in money income or profit. It will also help us to see how the business is making its money and therefore see how much more emphasis should be integrated into it.

An accounts package would allow the business to collect information about the usage level of a variety of components. Choosing the right accounts package is very important, the business would have to take into account the information it needs for management, tax estimation and tax preparation and would also have to enable the business to easily input the figures.

A pay roll package would help the business by automatically setting into a document the amount a worker should be paid in a certain month, by working on the figures that the employer has put in. e.g. Tax number, pension etc.

Also having design programmes such as Macromedia Fireworks and Photoshop would be good and more of an effective way of designs such things as templates for cake designs and the menu designs for the business.

My business will also need advertising; this could be on the internet, as a paid advertisement on a popular site such as Facebook or Myspace or even a advertisement in the local newspaper.

With any software or computers that you get, the company will also have to buy some sort of anti virus protection like Norton or Avg. This would prevent the computer getting any viruses and can also prevent any sites which could contain other things which count get into the system and steal any information which the business needs. Which if leaked could put the company into a lot of trouble or risk.

All of the software mentioned comes at prices where the business will have to find the best and more effective of each of the packages which would help benefit the company whilst also trying to get the cheapest option so that the business doesn’t lose money on buying software that the business doesn’t necessarily need. Also as software could be quite hard to understand workers who will be using the software will need training to use it which will also be cost efficient.

Andre Gibbs